Successfully investing in Cyprus

last updated on 10 October 2025 | reading time approx. 8 minutes

How do you assess the current economic situation in Cyprus? »
How would you describe the investment climate in Cyprus? Which sectors offer the largest potential? »
What challenges do German companies face during their business ventures into Cyprus? »
Why companies should choose to enter/remain in the Cyprus market? »
In your opinion, how will Cyprus develop? »

How do you assess the current economic situation in Cyprus?

Cyprus continues to demonstrate strong economic resilience and growth, positioning itself among the fastest-growing economies in the European Union. Following its recovery from the 2013 financial crisis—achieved a year ahead of expectations, the country has maintained a stable and upward trajectory.

Cyprus recorded a GDP growth of 2.8 percent in 2023, reflecting a normalization after the post-COVID rebound. For 2024, growth is forecast to remain steady at 2.8 percent, supported by:

Strong private consumption, bolstered by low unemployment and wage indexation.
Increased investment activity, particularly from incoming IT and Fintech companies establishing headquarters in Cyprus.
Continued expansion in tourism and professional services.

In 2025, GDP growth is expected to moderate slightly to 2.5–2.8 percent, as financial conditions tighten and global uncertainties persist.

Inflation decelerated to 3.9 percent in 2023, down from 8.1 percent in 2022, due to:

Interest rate hikes by the European Central Bank.
Declining energy and commodity prices.
Wage indexation mechanisms that helped maintain purchasing power.

Inflation is projected to further decline to around 2.2 percent in 2024, with a similar level expected in 2025, aligning with broader EU trends.

The labor market remains robust:

Unemployment fell to below 5 percent in 2024.
Employment growth is driven by tourism, ICT, and public sector hiring.
Wage growth is supported by collective agreements and automatic indexation.

Cyprus has maintained a budget surplus (4.3 percent in 2024), with public debt expected to fall below 60 percent of GDP in 2025. The banking sector remains stable, with improved asset quality and capital buffers.

The current account deficit remains a concern, though it is gradually improving due to strong services exports.
Tourism rebounded strongly in 2023, with a 20.4 percent increase in arrivals, successfully diversifying away from Russian markets by attracting visitors from Germany and other EU countries.
Risks to the outlook include:
Geopolitical tensions, especially the ongoing war in Ukraine and instability in the Middle East.
High construction costs and supply chain disruptions.
Global financial tightening, which could dampen investment and consumption.

Cyprus’s economy remains resilient and on a steady growth path. Despite global uncertainties and inflationary pressures, the country has maintained solid GDP growth, low unemployment, and fiscal discipline. Key sectors like tourism, ICT, and financial services continue to drive expansion, while inflation is gradually easing. Risks remain from geopolitical tensions and global financial conditions, but Cyprus is well-positioned to sustain moderate growth through 2025.

How would you describe the investment climate in Cyprus? Which sectors offer the largest potential?

Since 2015, Cyprus has maintained a positive and increasingly dynamic investment climate, supported by a series of strategic fiscal reforms and targeted incentives. These include:

Encouraging equity financing over excessive leverage.
Attractive personal income tax benefits, such as a 50 percent income tax exemption for new residents earning over 50,000 euros.
Tax incentives for innovation, including a 2.5 percent effective corporate tax rate for qualifying IP income.
Support for SMEs and start-ups, particularly in tech and research-driven sectors.
Residency and headquartering incentives, which continue to attract high-net-worth individuals and international firms.

Cyprus’s EU membership, strategic location, English-speaking workforce, and robust legal framework make it a preferred destination for regional and global investors.

High-Potential Investment Sectors

1. Shipping & Maritime

Cyprus is a leading global maritime hub, with over 250 shipping-related companies managing a fleet of more than 2,000 vessels.
The sector contributes significantly to GDP and employment, supported by a robust regulatory framework, EU-compliant maritime laws, and a favorable tax regime.
In 2025, the industry continues to grow through new ship registrations, relocation of maritime services, and digital transformation in fleet management.

2. Construction & Real Estate

The sector remains resilient and dynamic, with strong demand for both residential and commercial developments, especially in Limassol and Nicosia.
Despite higher interest rates, property values continued to rise in 2024, and the trend is expected to hold in 2025.
Foreign investment is driven by luxury real estate, mixed-use developments, and residency-linked property programs.

3. Professional Services

The professional services sector—including legal, accounting, auditing, and consulting—remains a pillar of Cyprus’s economy, contributing significantly to GDP and employment.
Cyprus offers cost-effective, high-quality services, supported by a multilingual, internationally educated workforce, and a legal system based on English Common Law.
In 2025, the sector continues to thrive due to strong demand from international investors, headquartering activity, and cross-border financial services, particularly in fintech, fund administration, and corporate structuring.
The country is home to a mature ecosystem of accountants, lawyers, and business consultants, making it a trusted destination for international business operations.

4. Energy & Hydrocarbons

Offshore gas discoveries in Cyprus’s Exclusive Economic Zone (EEZ) have attracted major international energy firms.
The country is advancing its role as a regional energy hub, with multilateral cooperation agreements and infrastructure development.
In 2025, exploration and investment continue, alongside preparations for electricity market liberalization.

5. Renewable Energy

Cyprus is capitalizing on its abundant solar resources, with 2,700–3,500 hours of sunshine annually—among the highest in the EU.
The renewable sector is expanding steadily, with private companies investing in solar farms and green energy solutions.
In 2025, the government continues to support the transition to clean energy through incentives and EU funding.

6. Tourism & Hospitality

Tourism remains a pillar of the Cypriot economy, with strong performance in 2023 and 2024 expected to continue into 2025.
The sector is diversifying into wellness, nautical, cultural, and golf tourism, extending the season and attracting new markets.
Major investments in luxury marinas, resorts, and integrated casino projects are enhancing Cyprus’s global appeal.

7. Education

Cyprus is a growing regional education hub, offering internationally accredited programs at competitive costs.
The sector includes 8 universities and over 40 higher education institutions, attracting thousands of international students annually.
In 2025, the focus is on academic excellence, research partnerships, and digital learning innovation.

8. ICT, Fintech & Start-ups

Cyprus is emerging as a tech and innovation hub, supported by tax incentives and a growing start-up ecosystem.
Companies developing patentable technologies or software benefit from a 2.5 percent effective corporate tax rate.
In 2025, the sector is driven by fintech growth, digital transformation, and EU-backed innovation programs.

9. Headquartering

Cyprus is emerging as a tech and innovation hub, supported by tax incentives and a growing start-up ecosystem.
Companies developing patentable technologies or software benefit from a 2.5 percent effective corporate tax rate.
In 2025, the sector is driven by fintech growth, digital transformation, and EU-backed innovation programs.

What challenges do German companies face during their business ventures into Cyprus?

All challenges can be overcome with the right support and guidance from consultants. It is crucial for success that an entrepreneur surrounds himself with expert advisers who have the knowledge and competence to assist and guide him through the planning stages, and who also take on the ongoing advice.

Investing in Cyprus has many advantages:

The land is strategically located in the eastern Mediterranean and has been an EU Member since 2004 and Eurozone member since 2008.
A robust and modernized business hub, it has access to more than 500 million EU citizens, single market, and trade agreements. As a reliable EU business partner, it can offer competitive benefits and sell business solutions.
Cyprus can be used as a hub for investment in the Middle East. It has concluded agreements with many of these states to avoid double taxation (the country has more than 60 double tax treaties).
Cyprus's simple tax and regulatory legislation makes the country a gateway to and from Eastern Europe, the Middle East, Africa, the Indian subcontinent, and the Far East.
Most of the population speaks English. There should be no challenges in communication. In addition, the country has highly skilled, multilingual professionals and the youngest workforce in the EU many of which are internationally educated (UK, USA, and Europe).
More advantages are the modern infrastructure and an advanced and efficient banking system. The legal system is closely aligned to English Common law with flexibility and constant updating to meet investors changing needs.
Those investing in Cyprus will be able to use tax incentives for first employment which provide for exemption from income tax for part of their basic salary of between 20 and 50 percent; It will also benefit from the exemption from withholding tax on dividend distribution and interest income, as well as the low-income tax rate: the maximum rate is 35 percent. The “60-day rule” by the Cyprus Parliament which loosens the restrictions for proving tax residency in Cyprus from 183 to 60 days of physical presence on the island.
Since joining the European Union, Cyprus has become a multicultural, cosmopolitan society. Many working professionals move to Cyprus because of the high quality of life, especially to Limassol. Cyprus has a very low crime rate, practically without significant violent crimes; Children can walk and play safely on the streets and there are several very good schools to teach in English, from pre-school to high school.
On the other hand, bureaucracy in Cyprus can be considered a challenge, whereas for some specific governmental services there might be a delay.
Banks in Cyprus are very thorough with their AML/KYC procedures and might request additional documents or information to open a company bank account. This process might take some additional time. In addition, the banking system in Cyprus is different and thorough review of the bank charges need to be reviewed before approved.

Why companies should choose to enter/remain in the Cyprus market?

Cyprus tax system offers several advantages to businesses and non-domiciled shareholders. In addition, the tax system evolves and produces new specialized programs for several different industries as well as tax regimes to attract different industries and related business to choose Cyprus.

Additional incentives include the 50 percent exemption of income tax for high-earners willing to move to Cyprus, as well as minimum effective corporation tax rate of 2.5 percent for IT related companies.

The tax system is considered business-friendly, in general taxes are simplified and easy to calculate, assessing your tax position at any given time. The key benefit of a resident corporation is the 12.5 percent corporation tax rate which is one of the lowest in Europe and complies fully with the EU legislation.

There is a 0 percent tax on dividend income, and profits from disposal of shares, bonds, debentures, or other securities.

Creating a limited company is a quick and straight forward procedure and there is no restriction in relation to the residence and nationality of the owner of the company and no limit exists in the location of the com¬pany’s operations.

In the last couple of years, several individuals have decided to relocate to Cyprus to take advantage of the tax rates as well as the easy access to the European Union as well as to other countries.

Due to the relocation of several companies the country and its cities are being developed and constructed to be a main financial services hub, whereas attracting foreigner employees to relocate and live and work in Cyprus.

There are numerous double tax treaties with other countries in which companies registered in Cyprus can benefit from.

Cyprus is known for its highly skilled labor in the corporate services section offered by professionals, lawyers and accountants who are very experienced and providing a high-quality service and advice.

In your opinion, how will Cyprus develop?

With an educated workforce, strong investment inflows, and sound fiscal policies, Cyprus is well-positioned to sustain its economic momentum in 2025, echoing the resilience and recovery seen in previous years. Deeper integration within the European Union—through policy alignment and access to the single market—continues to enhance transparency, competitiveness, and long-term prosperity on the island.

While the economic impact of the Russia-Ukraine war initially slowed financial development and spurred inflation, Cyprus has since stabilized. Inflation is expected to ease further in 2025, following a significant drop in 2024, creating a more favorable environment for investment and business expansion across all sectors.

GDP growth is projected to remain steady at around 2.8 percent in 2025, supported by robust domestic demand, EU recovery funds, and a thriving services sector. Tourism, a cornerstone of the Cypriot economy, is expected to maintain its upward trajectory, building on the strong performance of 2023 and 2024, with full utilization of its capacity and continued diversification into wellness, nautical, and cultural tourism.